HOUSE BUSINESS AND INDUSTRY COMMITTEE SUBSTITUTE FOR
HOUSE BILL 394
46th legislature - STATE OF NEW MEXICO - second session, 2004
AN ACT
RELATING TO STATE REVENUE; IMPOSING A HEALTH INSURANCE PREMIUM SURTAX ON CERTAIN INSURANCE PREMIUMS; RECONCILING CONFLICTING AMENDMENTS TO A CERTAIN SECTION OF THE NMSA 1978; CHANGING THE APPLICABILITY DATE OF CERTAIN PROVISIONS OF THE PREMIUM TAX.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
Section 1. Section 29-13-3 NMSA 1978 (being Laws 1983, Chapter 289, Section 3, as amended) is amended to read:
"29-13-3. DISTRIBUTION OF CERTAIN INSURANCE [DEPARTMENT] DIVISION COLLECTIONS--LAW ENFORCEMENT PROTECTION FUND CREATED.--There is created in the state treasury the "law enforcement protection fund". Ten percent of all money received for fees, licenses, penalties and taxes from life, general casualty and title insurance business pursuant to the New Mexico Insurance Code, except for money received from the health insurance premium surtax imposed by Subsection C of Section 59A-6-2 NMSA 1978, shall be paid monthly to the state treasurer and [by him] credited to the fund. On or before June 30 of each year, the state treasurer shall transfer to the general fund any balance in the law enforcement protection fund in excess of one hundred thousand dollars ($100,000) that is not obligated and that is in excess of the amount certified by the division to be distributed from that fund."
Section 2. Section 59A-6-2 NMSA 1978 (being Laws 1984, Chapter 127, Section 102, as amended by Laws 2003, Chapter 14, Section 18 and by Laws 2003, Chapter 58, Section 1) is amended to read:
"59A-6-2. PREMIUM TAX--HEALTH INSURANCE PREMIUM SURTAX.--
A. The premium tax provided for in this section shall apply as to the following taxpayers:
(1) each insurer authorized to transact insurance in New Mexico;
(2) each insurer formerly authorized to transact insurance in New Mexico and receiving premiums on policies remaining in force in New Mexico, except that this provision shall not apply as to an insurer that withdrew from New Mexico prior to March 26, 1955;
(3) each plan operating under provisions of Chapter 59A, Articles 46 through 49 NMSA 1978;
(4) each property bondsman, as that person is defined in Section 59A-51-2 NMSA 1978, as to any consideration received as security or surety for a bail bond in connection with a judicial proceeding, which consideration shall be considered "gross premiums" for the purposes of this section; and
(5) each unauthorized insurer that has assumed a contract or policy of insurance directly or indirectly from an authorized or formerly authorized insurer and is receiving premiums on such policies remaining in force in New Mexico, except that this provision shall not apply if a ceding insurer continues to pay the tax provided in this section as to such policy or contract.
B. Each such taxpayer shall pay in accordance with this subsection [three] a premium tax of three and three-thousandths percent of the gross premiums and membership and policy fees received by it on insurance or contracts covering risks within this state during the preceding calendar year, less all return premiums, including dividends paid or credited to policyholders or contract holders and premiums received for reinsurance on New Mexico risks.
C. In addition to the premium tax imposed pursuant to Subsection B of this section, each taxpayer described in Subsection A of this section that transacts health insurance in New Mexico or is a plan described in Chapter 59A, Article 46 or 47 NMSA 1978 shall pay a health insurance premium surtax of one percent of the gross health insurance premiums and membership and policy fees received by it on health insurance or contracts covering health risks within this state during the preceding calendar year, less all return health insurance premiums, including dividends paid or credited to policyholders or contract holders and health insurance premiums received for reinsurance on New Mexico risks. Except as provided in this section, all references in the Insurance Code to the premium tax shall include both the premium tax and the health insurance premium surtax.
D. For each calendar quarter, an estimated payment of the premium tax and the health insurance premium surtax shall be made on April 15, July 15, October 15 and the following January 15. The estimated payments shall be equal to at least one-fourth of either the payment made during the previous calendar year or eighty percent of the actual payment due for the current calendar year, whichever is greater. The final adjustment for payments due for the prior year shall be made with the return, which shall be filed on April 15 of each year, at which time all taxes for that year are due. Dividends paid or credited to policyholders or contract holders and refunds, savings, savings coupons and similar returns or credits applied or credited to payment of premiums for existing, new or additional insurance shall, in the amount so used, constitute premiums subject to tax under this section for the year in which so applied or credited. [except that:
(1) as to every insurer that throughout such preceding calendar year had at least forty percent of its admitted assets invested in New Mexico investments, as the same are defined in Subsection C of this section, the rate of such tax shall be nine-tenths percent in lieu of three percent; and
(2) effective January 1, 1992, the rate shall be one and four-tenths percent; effective July 1, 1992, the rate shall be one and nine-tenths percent; effective January 1, 1993, the rate shall be two and four-tenths percent; and effective July 1, 1993 and thereafter, the rate shall be three percent.
C. New Mexico investments for the purpose of Subsection B of this section are defined as follows:
(1) real estate located within New Mexico;
(2) bonds or obligations of New Mexico or of any county or other subdivision thereof;
(3) bonds, debentures or secured obligations of any corporation that has fifty percent of its assets located within New Mexico;
(4) first mortgages secured by real estate located within New Mexico;
(5) deposits in state banks, national banks and trust companies having their principal place of business within New Mexico;
(6) policy loans to residents of New Mexico; and
(7) preferred and common stock of corporations having at least fifty percent of their assets located within New Mexico.
D. Nothing contained in Subsection C of this section shall be construed to affect any provision of Chapter 59A, Article 9 NMSA 1978.]
E. Exempted from the [tax] taxes imposed by [Subsection B of] this section are:
(1) premiums attributable to insurance or contracts purchased by the state or a political subdivision for the state's or political subdivision's active or retired employees; and
(2) payments received by a health maintenance organization from the federal secretary of health and human services pursuant to a contract issued under the provisions of 42 U.S.C. Section 1395 mm(g)."
Section 3. Laws 2003, Chapter 58, Section 3 is amended to read:
"Section 3. APPLICABILITY.--The provisions of [this act] Laws 2003, Chapter 58, Section 1 apply to premiums received in the 2003 and subsequent calendar years; provided, however, that with respect to premiums received prior to March 20, 2003, the provisions of Subsection E of Section 59A-6-2 NMSA 1978 in effect prior to the effective date of Laws 2003, Chapter 58, Section 1 shall be applicable."
Section 4. APPLICABILITY.--
A. Unless an earlier surtax payment is required by the operation of Subsection B of this section, the health insurance premium surtax imposed by this act is applicable to all health insurance premiums and membership and policy fees received on or after October 1, 2004.
B. The health insurance premium surtax imposed by this act is also applicable to all health insurance premiums and membership and policy fees received for contracts issued or renewed on or after July 1, 2004.
Section 5. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2004.
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